Online brokerage firm Robinhood has suffered greatly in the previous quarter owing to a slump in cryptocurrency trading. The firm, which was once a favorite of retail investors, is now experiencing plateauing growth. There were several predictions from analysts that foresaw a dip in the crypto trading volumes. However, no one could have predicted the severity of the crypto trading drop. Transaction revenues plummeted by a whopping 78% – that’s $51 million in Q3 from $233 million in Q2.
As a result of this drastic drop, the per user overall revenue of Robinhood saw a 42 per cent decline. According to data from FactSet, the after-hours trading saw the firm’s shares go down by 10 per cent. There was a 41 per cent drop in transaction revenues as well, $267 million in Q3 from $451 million in Q2.
The co-founder and chief executive officer of the firm, Vlad Tenev, said that Robinhood developed crypto wallets and other new products in Q3. Tenev believes that the new products developed by the firm serve as a foundation for growth in the future. He also said that for crypto and retail investors, Robinhood is on its way to becoming one of the most intuitive and trusted platforms.
According to Robinhood’s own estimates, 50% of all brokerage accounts opened in the 2016 – 2021 period were on Robinhood. The group’s estimates also suggest that out of 22.4 million funded accounts, 50% consisted of first-time investors. The latest drop experienced by the firm’s shares took Robinhood well below $38, their July IPO price